PowerPoint Slideshow about 'Chapter 10' - reegan

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Successful productivity improvement programs are able to establish a clear connection between ee efforts and valued rewards—ees must believe that they can gain valued rewards by working hard (i.e. Lincoln Electric’s program)

Linking rewards to performance also makes sense from an expectancy theory perspective—efforts are not rewarded then there is little incentive for performing (i.e. general increase for everyone) –(Discuss on the Road to Competitive Advantage—10-1 page 304)

1990 about 50% of all U.S. companies used some type of pay-for-performance system

2000 the figure rose to 80%

Believe is that these programs can significantly increase ee motivational levels (Owen-Corning—Ohio manufacturer—WAKE UP TWO OHIIO COMPANIES—WOW!!!—utilize stock options and profit sharing—decreases ee’s guaranteed annual base pay, but provides them with large bonuses if the company performs at or above target levels

Merit pay plans establish effort-performance and performance-reward links (under ee’s control)—however merit budgets in the U.S. have been around 3% for many years) –ees know what the reward is if the chart is publicized

Sometimes supervisors give merit increases that are not based on performance—manager is dependent on a direct report due to their specialized expertise or when they threaten to appeal to upper management

Fail when ees do not value the rewards offered by the company—merit pool is not unlimited

Performance-reward link is hindered when supervisor are reluctant to make distinctions between members within their units (Top performer vs. lower performer—what is the merit % difference?

Deliver rewards as soon as possible after the desired behavior takes place—Instant or spot awards

Make sure individual performance can be measured accurately—Ideal measures are influential, objective, easily communicated, and inclusive of all the important behaviors the organization wishes to stimulate

For program to work, ees must believe management’s claim that performance will be fairly rewarded

Great deal of pressure on ees to produce—many people feel uncomfortable in that environment—financial reward derived from high productivity may not be great enough to offset the stress some workers experience under this type of reward system

Performance-organizational mission link—not all behaviors encouraged by these programs contribute to the org’s mission

Jobs become less repetitive and routine, production may become less efficient (enrichment would be ill advised in situations where the loss of efficiency cannot be offset by productivity gains from increased motivation

Programs that attempt to build quality into all phases of the design, production, and delivery of product or service by empowering workers to trace product or service problems to their root causes and redesign production processes to eliminate them

Self-managed work teams—a form of ee empowerment in which teams of six to eighteen ees from different departments work together to produce a well-defined segment of finished work